Quattro began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 30% are collected in the month of sale; 60% are collected in the first month after sale; and 10% are collected in the second month after sale. If sales for April, May, and June were $60,000, $80,000, and $70,000, respectively, what were the firm's budgeted collections for the quarter?

Question

Quizplus · Accepted Answer

To calculate the budgeted collections for the quarter, we need to break down the sales for each month and apply the collection pattern:

For April sales of $60,000:
- 30% collected in April = $18,000
- 60% collected in May = $36,000
- 10% collected in June = $6,000

For May sales of $80,000:
- 30% collected in May = $24,000
- 60% collected in June = $48,000
- 10% collected in July = $8,000

For June sales of $70,000:
- 30% collected in June = $21,000
- 60% collected in July = $42,000
- 10% collected in August = $7,000

Adding up all the collections, we get a total of $153,000, which is option C.

Quattro Began Operations in April of This Year